Consol has big plans for the Utica

COLUMBIANA, Ohio — Consol Energy has its roots in coal mining, but definitely sees a future in natural gas production.

Harry Schurr, general manager of Utica shale operations for Consol Energy, spoke June 14 at the fifth annual Columbiana Chamber of Commerce Business Breakfast. He said the company considers itself the “hometown player” since it began coal mining and leased the mineral rights to many acres in 1860s, meaning the company has leased local acres for years, starting with coal mining. He said that in some cases Consol has been involved with four generations of the same family on many parcels of land.

When the company made the decision to begin drilling operations in the Utica shale, the company established a base in Leetonia.

Background

In 2008, CNX Gas, a division of Consol Energy, began drilling the Marcellus shale in Pennsylvania. Then, in 2010, Consol Energy acquired Dominion E&P for $3.5 billion, which brought along additional shale acreage in Pennsylvania.

Leasing

Consol Energy is a little different from other drillers because it’s on a more long-term, and not a hurry-up, timetable. Schurr said Consol leased some of the acreage it holds years ago for coal mining or acquired leased land through one of its joint ventures. Other parts of the acreage is already held by production from previous coal mining or gas drilling.

“We are not as lease-driven,” said Schurr. “We don’t have the same type of pressure on us. We can be more methodical in our drilling.”

Joint ventures

Schurr said a joint venture between Consol and Noble Energy was created in 2011 and drilling commenced in the Marcellus shale and has continued as a joint venture in the Utica shale.

In 2012, Consol Energy began jointly developing the Utica shale with Hess Energy. Hess and Consol will be working on projects in Jefferson, Harrison, Belmont and Guernsey counties.

Meanwhile, CNX Gas has five wells drilled in Noble County, two in Tuscarawas and three in Mahoning. In addition, wells are planned for Portage County, and the company also has acreage leased in Trumbull County.

Schurr said Consol plans on 11 wells and Hess plans 16 wells in 2013.

So far, Consol Energy has drilled 200 horizontal shale wells, between the Marcellus and Utica, and there are 640 active gas-related permits issued to Consol. He said there are wells on the books that will contain 10 well bores on one pad.

Noble County

Schurr said Consol Energy is excited about the prospects in Noble County, and the company has had some good results from the wells drilled there.

For example, one well produced 768 barrels of condensate (liquids that drop out of the natural gas produced). On the flip side, however, another well just a mile away produced only 10 barrels.

He said Consol Energy is concentrating on trying to figure out where the areas of the Utica shale are highest in condensate, oil and natural gas.

Safety

Many of the business leaders at the meeting were interested in providing services for Consol Energy.

However, Schurr said one thing that is constant about Consol is that the company takes safety very seriously. He said that contractors have to be safety trained and show they are compliant before their services can be used.

Investments

Also speaking at the Columbiana Chamber of Commerce breakfast was Jason Wilson, director of the governor’s office of Appalachia. He said there is $5 billion invested in in the oil and gas processing, pipelines and even cryogenics, in Ohio and the majority has been in the Appalachian designated areas. He added that the number invested is constantly changing, as more projects are added related to shale.

Airport runway

One project that he is championing is extending the airport runway in Jefferson County to 5,000 feet to accommodate business jets. He said that the only larger runways near the Utica shale play are the Canton-Akron airport, Zanesville and one located at the Ohio University.

Wilson said one problem many of the large companies operating in the shale have is transportation. He said company representatives may fly in for only a few hours at a meeting and then fly back out.

Railroad

Another change Wilson has noticed is that crude oil produced on some of the wells is being hauled to railroad cars and then hauled to a processing plant in the East on the Norfolk-Southern railroad line which “goes right past our front door.” Wilson said when he was in the Ohio Senate he used to hear about the three C’s — Columbus, Cleveland and Cincinnati. “Now there are three new C’s in Ohio — Columbiana, Coshocton and Cambridge,” said Wilson.